By Tony Smith (NYT)

Published: February 5, 2004

The Brazilian antitrust authority ruled that the acquisition of Chocolates Garoto, a Brazilian candy company, by the Swiss candy maker Nestlé was a threat to competition, and ordered Nestlé to sell the unit or equivalent assets to a company that controls less than 20 percent of Brazil's $900 million chocolate market. Nestlé bought the Brazilian company, at the time one of the largest chocolate makers in the country, for $230 million two years ago. Analysts expected the agency to approve the sale with some conditions, allowing Nestlé to overtake Kraft Foods as the market leader in Brazil. ''It wasn't the decision we expected,'' said Ivan Zurita, chairman of the Brazilian operations of Nestlé. Kraft and Cadbury Schweppes of Britain, which lost out to Nestlé in the original bidding, had lobbied the government agency to block the deal. Kraft cannot buy Garoto because it already has a market share of more than 20 percent, but the ruling could lead to a second chance for Cadbury to enter the Brazilian market. Tony Smith (NYT)